Yesterday, 4:47 PM
- Trains carrying crude oil will be restricted to a 40 MPH speed limit in populated areas such as New York, one of the steps required by an order from the U.S. Department of Transportation in response to a series of derailments.
- The emergency order makes the agreement mandatory for all railroads hauling 20 or more tank cars linked together or 35 cars in total that are filled with oil or other flammable liquids, and applies to both older model DOT-111 tank cars and CPC-1232s the industry has been voluntarily building since 2011.
- The DoT also issued an advisory to railroads to use the latest technology to check for flaws in train wheels that can cause a crash; a broken train wheel is suspected of causing the March 5 derailment near Galena, Ill., of a BNSF Railway (BRK.A, BRK.B) train hauling 103 cars of Bakken crude.
- Other relevant tickers: CSX, UNP, NSC, KSU, GWR, CNI, CP
Mon, Apr. 13, 10:02 PM
- The scorecard since the Bank One/JPMorgan (NYSE:JPM) merger in 2004 - with Jamie Dimon taking the helm of the merged company - is a remarkable one, writes The Brooklyn Investor.
- Dimon has grown tangible book value per share at a rate of 14.1% annually. As comparison (though it isn't a perfect one), BVPS at Berkshire Hathaway (BRK.A, BRK.B) and Markel (NYSE:MKL) - hall of fame compounders - has grown by 10.1% and 12.5% respectively per year over the same time frame. Keep in mind that JPMorgan turned in this record during the period that includes the financial crisis.
- As for stock performance, someone owning Bank One when Dimon became CEO in 2000 and holding through the merger would have had a total return of 10.4% annually since - 170 basis points per year better than Berkshire Hathaway. The S&P Financials Index over that time has returned just 2.2% per year, and the S&P 500 only 4%.
- As for Dimon's defense against those arguing for a break-up of JPMorgan, BI's buying it, excerpting the CEO: "Our long-term view means that we do not manage to temporary P/E rations - the tail should not wag the dog."
- And finally, BI notes Jamie Dimon comes pretty cheap - the average percentage of profits paid to the JPMorgan CEO over the three years ended in 2013 was 0.09%, the lowest among the Too Big To Fail U.S. banks.
Tue, Apr. 7, 7:27 AM
- Berkshire Hathaway (BRK.A, BRK.B) agrees to buy 20M shares of Axalta (NYSE:AXTA) from The Carlyle Group for $560M, or $28 per share, and agrees not to sell anything for 90 days following the deal, after which Axalta will provide Berkshire with certain registration rights.
- Source: Press Release
- Based in Philadelphia, Axalta offers coating and painting systems, and has a market cap of about $6.4B.
- Shares are higher by 4.1% premarket to $29.50.
Mon, Apr. 6, 6:51 PM
- The exploding growth in oil train shipments fueled by the U.S. energy boom has sputtered in recent months, hurt by safety problems and low crude oil prices, WSJ reports.
- Railroads have been a major beneficiary of the U.S. energy boom, as some oil companies turned to trains to move crude to refineries from North Dakota and other areas underserved by pipelines, but WSJ says ~1.38M bbl/day of oil and fuels such as gasoline rode the rails in March vs. an average of 1.5M bbl/day in the same period a year ago.
- BNSF Railway (BRK.A, BRK.B), which is responsible for ~70% of U.S. oil train traffic, operated as many as 10 trains a day last year but now is averaging nine a day.
- Shipping oil across the U.S. by train can cost $6-$12/bbl, which makes sense only when the price of U.S. crude is significantly cheaper than oil pumped overseas; in recent weeks, the price gap between U.S. and Brent has narrowed to ~$7/bb, making some oil train shipments too costly at this time, but Barclays thinks U.S. crude may sell for $13/bbl less than Brent, which would boost oil train shipments later this year.
- Other relevant tickers: CSX, UNP, NSC, KSU, GWR, CNI, CP
Mon, Apr. 6, 10:24 AM
- "Clayton Homes relies on predatory sales practices, exorbitant fees, and interest rates that can exceed 15%, trapping many buyers in loans they can't afford and in homes that are almost impossible to sell or refinance," according to The Center for Public Integrity in a report titled: "Warren Buffett's (BRK.A, BRK.B) mobile home empire preys on the poor."
- Since Buying Clayton in 2003 for $1.7B, Berkshire has moved consolidate the fragmented mobile-home lending industry, with Clayton at a 39% market share in 2013 vs. just 13% in 2005. The company had pre-tax income of $558M last year, according to the report, which details a number of hard-luck stories from Clayton customers.
Tue, Mar. 31, 2:54 PM
- Could CarMax (NYSE:KMX) or AutoNation (NYSE:AN) be next? Larry Van Tuyl, chairman of Berkshire Hathaway Automotive (BRK.A, BRK.B), tells CNBC he hopes to purchase more U.S. auto dealerships.
- Berkshire closed on its purchase of Van Tuyl - which has 81 dealerships in 10 states - earlier this month.
- Previously: Berkshire closes on auto dealer purchase (March 10)
Mon, Mar. 30, 7:25 PM
- BNSF Railway says it is cutting the speed of crude oil trains in some urban areas to as slow as 35 miles/hour, a 30% reduction, to improve safety following recent high-profile derailments in the U.S. and Canada.
- BNSF, owned by Berkshire Hathaway (BRK.A, BRK.B), says it also is stepping up efforts to find and repair defective wheels before they can cause derailments.
- The company says it already has doubled the frequency of track inspections near waterways, and now will inspect the track 2.5x more often than regulations require.
- BNSF hauls much of the oil produced in the Bakken region.
Wed, Mar. 25, 10:19 AM
- Berkshire Hathaway (BRK.A, BRK.B) owns 51% of Heinz, and Berkshire/3G will own 51% of the new Kraft Heinz, meaning Berkshire will wind up with a bit more than 25% of the combined entity.
- Where this deal differs from Heinz is that existing Kraft shareholders will keep their stock, and will own 49% of the merged - publicly traded - firm.
- It's a score for Buffett, as Berkshire will own more than 300M shares of the new firm, and will have paid less than $30 each for them. Pulling out the $16.50 per share special dividend due to Kraft owners as part of deal, Berkshire has more than doubled its money, based where Kraft is currently trading.
- Naturally, The Oracle has no intention of taking profits. “You won’t see Berkshire reduce its interest,” says Buffett. “We will be in this stock forever.”
- Source: WSJ
- Previously: Kraft, Heinz announce merger (March 25)
Wed, Mar. 25, 6:23 AM
- H.J. Heinz, owned by P-E firm 3G Capital and Berkshire Hathaway (BRK.A, BRK.B), and Kraft (NASDAQ:KRFT) have entered into a definitive merger agreement to create The Kraft Heinz Company, forming the third largest food and beverage company in North America.
- Heinz shareholders will own a 51% stake in the combined company, while Kraft shareholders will hold a 49% stake and receive a special cash dividend of $16.50 per share.
- Together the new company will have eight $1B+ brands and five brands between $500M-$1B.
- "I am delighted to play a part in bringing these two winning companies and their iconic brands together. This is my kind of transaction," said Berkshire Hathaway CEO Warren Buffett.
- 3G previously took Burger King private in 2010, bought Tim Hortons last year through the holding and teamed up with Berkshire Hathaway two years ago to buy Heinz for $23B.
- Kraft’s revenue last year was effectively flat at $18B and net profit fell 62% to $1B, due to higher commodity costs and big charges related to its post-employment benefit plans.
- Previously: Kraft now +16.5% on buyout report; MDLZ, CAG also gain (Mar. 24 2015)
- KRFT +15.8% premarket.
Tue, Mar. 17, 10:58 AM
- The Keystone pipeline disappointment is hardly a death knell for TransCanada (NYSE:TRP), as the company remains one of the top holdings in Skip Aylesworth’s Hennessy Gas Utility fund, which climbed 21% last year as distribution gains trumped price drops.
- TRP is "a fine, healthy company and, yes, this is a hiccup, and they would love to see Keystone happen, but it is just a part of their business," Aylesworth tells Barron's.
- Of one Aylesworth's favorite energy investments actually is Berkshire Hathaway (BRK.A, BRK.B), which is heavily involved in the distribution of natural gas and owner of Burlington Northern, which is exploring using natural gas to fuel long-distance freight trains.
- Other favorites: ENB, WMB, LNG, NJR, KMI, SE
Tue, Mar. 17, 8:59 AM
- BNSF Railway (BRK.A, BRK.B) is sued by a trade group for 400 U.S. refining and petrochemical makers objecting to a $1,000 surcharge the company tacked onto older model tank cars.
- The American Fuel & Petrochemical Manufacturers says the surcharge is designed to encourage shippers to retrofit or scrap older tank cars in favor of safer “jacketed” models that are not required by federal regulators.
- The surcharge adds $1.50/bbl to shipping costs, according to the trade group, which represents ~95% of U.S. refining capacity; BNSF began adding the fee on Jan. 1.
- BNSF hauls more than 600K bbl/day of crude, including more than half of the oil pumped from the Bakken formation in North Dakota and Montana.
Sat, Mar. 14, 10:41 AM
- BYD Company sold a subsidiary to Holitech this week for 2.3B yuan ($368M).
- The Chinese company said in its filing with the Hong Kong exchange that it intends to allocate more resources to develop its new-energy vehicle business to expand on existing levels of electric car and bus production.
- A new 3B yuan ($479M) bond offering from BYD is also in the works.
- BYD is emerging as the main competitor to Tesla Motors (NASDAQ:TSLA) in the electricity storage industry with plans to triple battery production.
- Execs with BYD maintain the company could produce ~34 GWh of battery capacity by 2020 if demand trends are strong - a pace that rivals projections for Tesla's Gigafactory production.
- Berkshire Hathaway (BRK.A, BRK.B) owns a sizable stake in BYD Company (OTCPK:BYDDY, OTCPK:BYDDF).
- BYD's aggressive positioning could have some impact on companies tied to the lithium industry.
- Potential lithium plays: OTCPK:PCRFY, ARTX, SQM, ENS, OTCQX:WLCDF, FMC, LIT (add your own in the comment stream).
- Previously: Dark cloud over China auto market (March 4)
Thu, Mar. 12, 8:10 AM
- Canada proposes tough new oil tank car standards and says even improved tank cars coming into service now would have to be off the rails by 2025 at the latest.
- New cars would need thicker tank car walls and an outer cover for thermal protection.
- The announcement comes after a recent series of fiery derailments in Canada and the U.S., including some that involved the newer, improved rail cars, and as more oil increasingly travels by rail due to rising production and a shortage of pipelines.
- The move signals that the U.S. may adopt similar regulations and will increase pressure on the rail car industry to produce enough new cars on a tighter deadline.
- Relevant tickers: CNI, CP, CSX, UNP, KSU, NSC, GWR, BRK.A, BRK.B, GBX, TRN, ARII, RAIL, WAB
Tue, Mar. 10, 7:25 PM
- Canada and the U.S. are "very close" to announcing stronger new oil tanker rail car standards, intended to limit fires and pollution when oil trains derail, Canadian Transport Minister Lisa Raitt says.
- A recent spate of fiery oil tanker accidents, including three derailments in just the past month from Canadian National Railway (NYSE:CNI), has ratcheted up the pressure on both governments to take action.
- Raitt is recommending that Canada's House of Commons transport committee summon CNI to explain its recent accidents.
- Meanwhile, officials from large rail operators met with White House staff last week to argue against the need for electronically controlled pneumatic brakes, saying they would be costly and not add significant safety benefits.
- Other relevant tickers: CP, CSX, UNP, KSU, NSC, GWR, BRK.A, BRK.B, GBX, TRN, ARII, RAIL, WAB
Tue, Mar. 10, 9:45 AM
- "This is the beginning of a journey that will have no end," says Warren Buffett upon completion of Berkshire Hathaway's (BRK.A, BRK.B) purchase of Van Tuyl, the country's largest privately-held auto dealer. "[The] business will be thriving and growing 50 and 100 years from now. The fun has just started."
- "Every managing partner has enthusiastically committed to stay on with Berkshire Hathaway Automotive."
- Source: Press Release
- Previously: Buffett picks up auto dealership group (Oct. 2, 2014)
Fri, Mar. 6, 12:34 PM
- The two rail cars that split open and burst into flames during yesterday's oil train derailment in Illinois were retrofitted with protective shields to meet a higher safety standard than federal law requires, BNSF Railway (BRK.A, BRK.B) says.
- The train’s tank cars were the newer 1232 model, which was designed during safety upgrades voluntarily adopted by the industry in hopes of keeping cars from rupturing during derailments, but 1232 cars involved in three other accidents - including one last month in West Virginia involving a train carrying 3M gallons of North Dakota crude - have split open in the past year.
- The local sheriff says the train yesterday was transporting oil from the Bakken region.
BRK.A vs. ETF Alternatives
Berkshire Hathaway Inc is a conglomerate holding company owning subsidiaries engaged in a number of business activities, including property and casualty insurance and reinsurance, utilities and energy, finance, manufacturing, service and retailing.
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